Self-directed IRAs allow an individual to invest in non-listed assets like precious metals and real estate that aren’t listed on a public exchange.
Before investing in gold IRAs, it is vitally important to gain an understanding of what the IRS allows and doesn’t allow, in order to avoid making any costly errors with your retirement funds.
How to Buy
Many retirement account custodians don’t allow you to directly purchase gold coins or bullion with your IRA funds; however, some do offer true self-directed IRAs which allow investors to invest in precious metals as well as alternative assets.
These accounts allow you to diversify your portfolio away from paper assets denominated in dollars by adding physical gold and silver investments, but be wary of any fees associated with these investments.
In general, an IRA custodian or precious metals company will charge annual account maintenance and storage fees. Some providers also add a markup on your purchase price of precious metals.
Look for a gold IRA company that discloses its fees online or can refer you to an experienced custodian who does. A depository should accept your type of precious metals; slabbed, graded “rare” coins shouldn’t be accepted! Don’t forget the costs involved with shipping them from dealer to depository and onward to your IRA custodian!
Taxes
When it comes to investing in precious metals in a self-directed retirement account, you have more choices than conventional brokerages can. While traditional pre-tax and Roth IRAs often limit investments to cash, stocks, bonds, mutual funds or mutual fund units only; with precious metals IRAs you have access to physical bullion held under IRS guidelines for safekeeping.
Gold, silver and other precious metals tend to appreciate over time; however, investors should keep in mind that there is no return from this form of investment. You should carefully consider your individual financial goals and circumstances when making this decision.
Once you have made the decision to add gold to your IRA, the first step should be selecting an IRA custodian. Your chosen IRA company may even be able to connect you with experienced custodians that specialize in alternative assets like gold. Once you find a trusted dealer, direct your IRA custodian to send funds directly to that dealer so that bullion purchases can take place directly through them.
Custodians
When investing in a gold IRA, it is crucial that you consider its custodian. Approved by the government to provide asset custody services for investors, these entities often charge annual and storage/insurance fees as part of their fees structure.
Additionally, any investment costs involved with purchasing precious metals for your IRA must also be covered – these expenses include taxes, shipping and insurance fees.
Many investors view Gold IRAs as an effective way of diversifying a retirement portfolio, because precious metals such as gold tend to maintain their value more reliably than stocks, bonds or mutual funds. Furthermore, gold is considered an inflationary hedge which helps protect IRA investments against market volatility. When selecting their gold dealer however they should exercise due diligence; some dealers may lack accreditation and fineness requirements imposed by the IRS.
Storage
Even though IRAs can hold physical gold investments, certain key points must be kept in mind when managing them. First and foremost is storage: according to IRS regulations, precious metals must be held off-site and in a secure depository facility; using home storage options puts your retirement savings at risk and could open you up to personal liability claims in the event of theft or damage.
Storage fees vary between depository companies and may include storage charges, insurance fees and markup. Though not specific to gold IRAs, you should factor these fees into your total investment costs when planning. In addition, your IRA custodian may levy setup or annual fees that could vary – they may even waive them completely depending on which custodian you select.
